APAC's hotel transaction volume hit US$5.2b YTD in 9MFY18

China, Japan and South Korea accounted for 70% of transaction volumes.

Asia Pacific’s (APAC) total hotel transaction volume stood at US$5.2b as of end-September with the region inking 101 deals across 11 countries, according to JLL’s Hotel Investment Highlights report. 

This translates to over 20,000 rooms with an average price of US$256,900 per key, the report highlighted. 

“Whilst transaction volume is down YoY and rising USD interest rates impacting some underwriting, continued access to well-priced financing for a number of investors, as well as abundant equity, continues to drive domestic and cross border deal making,” JLL noted.

Of the total transaction volume in Asia, approximately 70% originated from properties located in China, Japan and South Korea and most were bought by domestic investors.

Private equity firms and property companies were said to be the biggest investors in terms of transaction volume during the first nine months of 2018, investing US$1.6b and US$1.5b in the hotel space respectively, according to the report.

Properties in China represented slightly more than a quarter of the transaction volume, the report added, with the sale of Ariva Beijing West Hotel & Serviced Apartments in Beijing seeing the biggest transaction for the period at US$242m or US$765,000 per key.

“The investment market in China has cooled as a result of the de-risking campaign that has been ongoing for the past year,” JLL said. “Whilst domestic investor interest has dampened, foreign investors remain active and are keeping a keen eye out for distressed assets for acquisition.”

Singapore’s trading performance is similarly in the upswing, especially for the luxury segment, as investor appetite for the city is unlikely to subside and frustrated capital will continue to push pricing higher. “Apart from Le Meridien Singapore on Sentosa which has been put on sale for the second time in two years, the Singapore market remains tightly held with limited opportunities being formally offered for sale,” JLL observed. “On the other hand, two hotel sites that have been released by the Urban Redevelopment Authority (URA) of Singapore under the government land sales (GLS) programme are expected to generate strong investor interest.”

The first is a hotel site along Club Street that can potentially yield 390 rooms and is on the Confirmed List, whilst the second is a White site on the Reserved List along Marina View which yield 540 rooms, the report revealed.

“As more institutional-grade properties come to market, transaction momentum is expected to pick up towards the end of 2018 and early-2019 as opportunities present themselves,” JLL said. “Activity in the merger and acquisition space, driven by international and regional operators and aggressive private equity, will continue in 2019 principally through off-market and structured transactions.”